Heineken follows Carlsberg into Burma with $60m brewery build

By Ben BOUCKLEY contact

- Last updated on GMT

Related tags: Beer

Heineken follows Carlsberg into Burma with $60m brewery build
Heineken has signed a JV to produce and sell Heineken beers in Burma (Myanmar), and plans to build a $60m brewery there, following Carlsberg, Coke and Pepsi into the country.

The Dutch brewer announced today that it had inked a JV with local spirits leader Alliance Brewery Company, a private firm majority-owned by local entrepreneur Aung Moe Kyaw.

Jean-François van Boxmeer, Heineken CEO and chair, pointed to a “truly exciting business opportunity that expands further our exposure to high-growth markets”​.

Through its subsidiary, Asia Pacific Breweries, Heineken will manage the JV via a 57% controlling stake, provide brewing and technical expertise, and assume responsibility for ingredient procurement and brand licensing.

The new entity, APB Alliance Brewery Company, has already gained approval from the government (Myanmar Investment Committee) to build a new greenfield brewery in Burma.

Heineken spokesman John Clark told BeverageDaily.com that the brewer was laying the foundations for growth in Myanmar, by entering the market at a relatively early stage.

Pointing to low beer consumption in Burma - 3l/year per capita, versus 30+ in Vietnam - Clark said: "Look at the opportunities in the market. Especially when you see Coke, Pepsi, Unilever, P&G, Ford, etc. going in there. It's becoming a far more attractive market for foreign investors."

We posed the question of whether Burma was a more attractive opportunity for major brewers, given a larger population than Laos or Cambodia, and potential religious objections to alcohol in Malaysia and Indonesia that could limit growth.

"I think all these markets are attractive. Take Indonesia. Some people might not drink beer on religious grounds, but it's still a massive beer market," ​Clark said.

He added that billions of dollars had been invested in Myanmar already in 2013. "There's a lot of money being put into the country. And this creates opportunity and room to grow, be it in beer, soft drinks or shampoo."

Asked about plans to brew Heineken - given that few drinkers in Myanmar are currently able to afford the premium brand - Clark said his firm's eponymous brand would be positioned "at the very top".

"But we will be looking at launching a mainstream, and possibly a budget brand. We're taking these kind of decisions now," ​he said.

Aung Moe Kyaw, chairman, Alliance Brewery Company, said his company was excited by the prospect of working with Heineken and pointed to its “knowledge and experience of the local market combined with the brewing and marketing know-how of Heineken”. 

Heineken said its announcement followed positive progress in terms of political and social reforms in Burma, the April 22 decision by the EU Council to lift all sanctions on Burma (aside from a still extant arms embargo), and recent decisions by other multinationals to enter the country.

Clark said that Heineken welcomed competition in beer from rivals in Myanmar as a means of stimulating growth and brand consciousness.

Thai Bev billionaire Chareon Sirivadhanabhakdi recently acquired Singapore-based Fraser & Neave (assets include Myanmar Brewery), while Carlsberg signed a joint venture in early February to acquire a 51% stake in a newly created JV (with Myanmar Golden Star Breweries); the Danish firm also plans to build a brewery in Burma.

"I’s a case of who can do the best job, in terms of building a connection with consumers over time. You’ve got to earn the customer’s loyalty. We realize that,"​ said Clark.

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